Nylon President Reports to Court This Month for Money Laundering Trial

How did a white collar crook from Philly come to run New York's indie fashion magazine?

Later this month, the longtime president of Nylon magazine, Don Hellinger, and its current chief financial officer, Jami Pearlman, will report to court for trial readiness. In February, US Attorneys charged them with money laundering and operating an illegal gambling business. They seek $44 million in forfeiture.

Judging from its pages, downtown New York is central to Nylon’sDNA. Its name was an amalgam of New York and London, and the magazine has operated out of a Greene Street loft since it launched in 1999. A September issue spread was shot at the city’s latest hipster enclave, Rockaway Beach. But the trial will take place in Philadelphia, Pa., where the crew of suits who cut its waifish writers’ checks have been devising scams and having run-ins with the Federal Trade Commission since before most Nylon readers were even born.

Launched in 1999, Nylon catapulted to influence on the reputation of its well-regarded founders. West Coast magazine power couple Marvin and Jaclyn Jarrett sold their stake in the influential yet illegible culture magazine Ray-Gun and formed a company called Pop Media. They decamped to Soho, picking up supermodel Helena Christiansen on the way and making her the magazine’s creative director. Nylon aimed to subvert the conventions of typical fashion magazines: It cast overweight or odd-looking models, consulted goth pop star Shirley Manson, of Garbage, for beauty advice, and hired Jason Lee’s wife to shoot the photos for his profile. The Observer dubbed it a New Yorker for the supermodel set, and in its second year, Nylon was nominated for a National Magazine Award for General Excellence, up against Harper’s, the longest running monthly magazine in America.

As many magazine editors know all too well, there’s no equity in an Ellie. During its first few years, Nylon ran up enormous debt, according to sources familiar with the company’s management. Around 2003, Larry Rosenblum was hired as a consulting chief financial officer, and he eventually became magazine president. Mr. Rosenblum reached out to an old friend, Don Hellinger, with whom he’d grown up in Philadelphia. Mr. Hellinger, who’d begun his business career working in his family’s kosher catering company, had gone on to establish a number of small consumer financial services firms and telemarketing companies. He opened his wallet, and in 2005 established Nylon Holding, Inc., to operate the company’s financials out of Langhorne, Pa., alongside his other companies.

The Nylon rescue mission was the first success in what became pattern of investments and acquisitions that would eventually establish Mr. Hellinger’s unlikely foothold in New York media.

Mr. Rosenblum developed an ambitious plan to run a consortium of niche titles that could share publishing resources, over which he would rule as the “Jason Binn of downtown magazines,” according to a Mediabistro article. In 2006, he bought the stylish Japanese ex-pat magazine Tokion from its founder Andrew Glickman for a reported $2 million. In 2007, he added the high brow tattoo quarterly Inked to his portfolio, which he gave the name Downtown Media Group.

One evening later that year, Mr. Rosenblum sat in the back of Tom and Jerry’s—the media-heavy watering hole on Elizabeth Street where he knew the bartenders by name—celebrating the acquisition of Animal, an underground magazine edited and published by media troublemaker Bucky Turco. Mr. Rosenblum mused about purchasing the New York Press. He picked up the drinks that night, but soon after, he stopped returning Mr. Turco’s calls and neither deal was consummated.

By then the recession was real, advertisers were disappearing, and the business of magazine publishing had begun to feel less like a game of Monopoly and more like hot potato. Mr. Rosenblum never even got one issue of Inked out before he sold it to Mr. Hellinger, who formed the company Pinchazo Media. In early 2009, Mr. Rosenblum sold him Tokion; like millions of American homes, it was in foreclosure. Having fled the publishing business, Mr. Rosenblum spent a year operating a NASCAR track in Virginia and then moved back to Philadelphia, where he now owns a popular Montreal-style bagel shop.

In May of that year, Mr. Hellinger made a solo media play, for the San Francisco–based shelter title Surface. He then branded his design-centric quartet (Nylon, Inked, Tokion and Surface) Quadra Media, LLC.

For the most part, Mr. Hellinger stayed out editorial operations, according to former editors. One exception was a clash with Inked’s editor in chief Jason Buhrmaster. A career journalist, Mr. Buhrmaster aspired to create a tattoo magazine with editorial content of a quality that would fit in with the rest of Quadra’s design-centric portfolio. Mr. Hellinger was less discerning, Mr. Buhrmaster said, urging the editor to take meetings with every reality television producer or tattooed freelancer he came across.

That may sound like a typical editor-publisher dispute. But more troubling signs of Mr. Hellinger’s business strategies soon began to reveal themselves. In April 2009, in what appeared to be a cost-cutting measure at Nylon, Mr. Hellinger sent an e-mail to the magazine’ssubscribers, trumpeting a new fulfillment policy—digital editions.

“No more waiting for your new issues to come in the mail!” the email said. “We will email each new issue of Nylon to you the day our editors sign off on it.”

In an understated postscript, the email noted that if the magazine’s paid subscribers wanted to continue receiving hard copies of the magazine, all they had to do was ask.

“P.S. If for some reason you would prefer to receive the print edition of NYLON instead of the digital edition, simply call 1-866-639-8133.”

Publisher Jaclyn Jarrett later told WWD that the e-mail had only been sent to those who had picked up free gift subscriptions, but reports of financial instability at Quadra became routine. Later that month, rumors circulated that Quadra was foreclosing on Surface magazine. In June, the magazine’s staff moved out of its offices and began bunking with the parent company.

Nonetheless, Mr. Hellinger was enthusiastic about the business. He traveled constantly between Philadelphia, Miami, and New York, picking up all the local magazines along the way and showing them tohis editors. He got Nylon prime spots at the ends of the racks at airport newsstands. He was new to magazine publishing, but he was a skilled marketer and hustler.

Indeed, before Mr. Hellinger got into the magazine business, he’d acquired something of a rap sheet. In 1989, he was convicted of tax evasion and mail fraud in connection with a phony coupon scheme and fined $30,000. In 1995, the Federal Trade Commission accused him of deceptively promoting credit cards via 1-900 numbersthat charged as much as $24 a call (he settled). In the late ‘90s and early aughts, Mr. Hellinger and a cohort of suburban Philadelphia partners oversaw a suite of payment processing companies that helped a number of telemarketing companies dupe and defraud the elderly, according to court documents.